Tata-owned India Hotels sells 5.1 per cent stake in Belmond for $49.57 million

Indian Hotels Company has sold its overseas subsidiary Samsara Properties at 51.75 lakh class A shares of Belmond for a consideration of $49.57 millionRavi Teja Sharma | ET Bureau | July 02, 2016, 08:36 IST

NEW DELHI: Indian Hotels Company Ltd, which owns the Taj Group of Hotels & Resorts, has sold 5.1% of its total outstanding class A common shares of hotel company Belmond Ltd, formerly known as the Orient Express Hotels, for $49.57 million (around Rs 332 crore) to retire its debt.

“Samsara Properties Limited, the Company's indirect overseas wholly owned subsidiary, has sold 5,175,000 (Five million one hundred seventy five thousand only) Class 'A' Common Shares of the face value of US$ 0.01 each of Belmond Limited, representing 5.1% of the total outstanding Class 'A' Common Shares for a net consideration of US$ 49.57 million,” IHCL said a filing with the Bombay Stock Exchange.

The company said the sale proceeds will be utilized largely for retirement of debt. Its consolidated net debt stood at Rs 4,386 crore at the end of March 2016.

After this transaction, Samsara Properties Ltd continues to hold 0.44% of the Class 'A' common shares of Belmond Limited, the NYSE-listed company that operates luxury hotels, tourist trains and cruises.

In February this year, IHCL had cut down its shareholding in Belmond by selling 1.24% of its 6.9% stake in the company for Rs 82 crore. Industry experts had said that that time that IHCL took a haircut on the sale as the price was lower than what it paid to acquire them in 2007. IHCL had reportedly purchased shares of Belmond at around $35 per share. The part exit had happened at an average price of $9.3 per share.

In March last year, Belmond had announced a share buyback programme for its shareholders. The NYSE-listed company —which operates luxury hotels, tourist trains and cruises — intended to buy up to $75 million of its class A stock through open market or privately negotiated transactions. IHCL has invested about Rs 1,200 crore in the hotel chain by picking up stock in phases.

The 114-year-old company has been selling some its top assets globally to pare debt. In May the Tata Group firm said it is planning to sell its Taj Boston hotel for a base price of $125 million (around Rs 836 crore). The hotel is reportedly being acquired by a group of investors led by Boston-based real estate development firms New England Development and Eastern Real Estate.

The property — which was one of the three US properties of the group — was acquired in 2006 for $166 million, with the aim of having a significant presence in the US market.

Two years ago, IHCL had sold the loss-making Blue Sydney in Australia for Rs 180 crore.

To reduce its debt, IHCL has embarked upon an asset-light model even as it increases its brand presence in top global markets and in India.